Tesla Having Its Best Day in Five Months, Here’s Why…
Tesla Motors Inc. shares have shifted into high gear Monday, reported The WSJ.
The stock is having its best day in five months, up as much as 8.8%, after the electric-car company reported Friday that first-quarter vehicle deliveries came in stronger than expected. Stock markets were closed Friday in observance of Good Friday, so shares are getting their first chance to react in Monday trade.
In a filing made Friday with the Securities and Exchange Commission, Tesla said 10,030 units were delivered in the first three months of the year, exceeding CEO Elon Musk’s initial forecast by 500 units and representing a 55% increase in deliveries from the same period a year ago.
The move by Tesla to begin announcing quarterly deliveries several days after the fiscal period ends is the first of its kind for the car company. Before the latest quarter, it had waited until well after a quarter ended to disclose figures, which put it out of step with the auto industry trend of reporting sales on a monthly basis. Tesla’s faster disclosure of sales figures ushers in a new era of transparency for the business, says Pacific Crest analyst Brad Erickson.
“Disclosing end-of-quarter deliveries from now on shows management’s confidence in the sustainability of demand, in our view,” he added.
Tesla’s first quarter deliveries surpassed Mr. Erickson’s 9,500 estimate, and they eclipsed expectations of 9,500 at Global Equities Research too. Both firms have outperform, or overweight, ratings on the stock with price targets of $293 and $385, respectively. Wall Street, in general, is bullish on Tesla shares with an average price target of roughly $250 among 22 analysts.
After earlier rising as high as $207.75 on Monday morning, Tesla shares were recently up 7.8% to $205.91.
Trip Chowdhry, managing director of equity research at Global Equities Research, is particularly upbeat on Tesla’s outlook, forecasting a steady improvement in second-quarter deliveries with an acceleration in the third quarter and onward. “If Tesla is able to execute well, and continues to push the innovation envelope; we will not be surprised if Tesla emerges to be the most valuable company of the Century,” he wrote.
After a visit to Tesla’s factory Saturday, Mr. Chowdhry says production activity seems to have ramped up in March and is anticipated to continue into April, probably reflecting an end to the West Coast port strikes and easing of parts supply issues. That gives him confidence the car company can deliver at least 12,000 vehicles in the second quarter to reach Tesla’s first half target of 22,000 deliveries.
The company will unveil a brand new product line at the end of April, which is speculated to be a stationary battery storage system for residences. As Mr. Musk looks to grow the company, batteries could add a larger revenue stream to the business that currently gets roughly 95% of its sales from cars.
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